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Selling a house...when you're broke!

post #1 of 7
Thread Starter 
I recently heard some people say it cost them $10k+ out of pocket just to sell their house at closing. We need to sell our house within the next year or so. It is too small and awkwardly laid out for us. The yard is too small, there is no privacy, and we are applying for jobs elsewhere in hopes of better pay. We bought this house 3.5 years ago with a USDA loan. At the time, it was newly remodeled and we got it at a great deal the first day it was on the market. $75k for a remodeled older house in a very desireable neighborhood in our small town. But we've had financial issues and have more debt than when we moved in-a newer van after ours died the month it was paid off, etc. we have NO savings, but we will have to move soon for a new job.

Problems-our guaranteed 5-10 year roof (our loan required it) literally started flying apart the month we moved in. The front part has to be replaced ASAP and the porch rotted out this winter because it is enclosed concrete with wood floor and the roof got a hole from the extreme weather. This house has really been nothing but a money pit. So somehow we will have to fix all of this AND come up with more money than we could ever imagine having to sell it? We're not worried about it selling, we've had people inquire of us already, even.

So what I'm wondering is:

How to find the money for required repairs? Would they even give us a bank loan to remodel knowing we were about to sell?

How much do you suppose selling costs would be and how much we would lose selling a $75k house?

Is financing harder for a second house? We've made every payment on time and should still have good credit, but would getting a loan be harder or more costly than a first time mortgage? Dh wants to rent, but we have a house of pets and kids, so it's nearly impossible to find a rental.
post #2 of 7
I can't answer most of your questions because things work quite differently in the US but I would probably talk to a real estate agent and ask them if it's worth you doing the repairs. It may be better for you to sell the place "as is" rather than trying to recoup costs.
post #3 of 7

Costs and commission are deducted from the profits of the final sale (on the seller's side) - so you dont need up front money from that (unless you sell for less then it all covers). At least in my experience.

 

Getting a new mortgage for your next house should be the same or even easier since you have received one mortgage loan and paid off  - proof of handling a large sum of loan. So long as you have a good track record.

 

You may need some upfront cash to fix known problems, but you could do what you can before it goes up for sale and do anything else as negotiating with the buyer. Real estate agents would have ideas (some sellers offer 1000 cash at the end of deal to go towards painting or whatever.) You can do that if it sells for more then the mortgage and commission.

 

Commission is typically 7% in my area. Not sure what selling costs are. (The buyer pays closing costs).

 

Most of the money paid out comes out of the final sale money so long as it sold for more then what is owed on the mortgage.


Edited by SunRise - 3/29/13 at 3:48pm
post #4 of 7

What you pay all depends on what you owe on the house vs. how much you can sell the house for.  You can sell "as is", list the problems and price accordingly.  There is no cost to put it on the market. Typical costs add up to about 10% for the seller (2 real estate agents, plus closing costs).  You can try, see what kind of offers you get, if any, and pull it off if you don't get the kinds of offers you need.  If folks are paying out of pocket, then the costs of paying off their loan + the cost of selling adds up to more than what they were able to sell the house for.

 

If you price it right, depending the area, you could sell it easily as is.  In our area, the rock-bottom houses are getting snapped up and fixed up.

 

Look into what kind of warrantee you have left on that roof, if any.  Call the manufacturer, call the company that installed it.  Hopefully you haven't waited too long.  If it was as bad as you said it was in that time frame, it should have been under warrantee at the time.  If you've waited, then you are probably out of luck.

post #5 of 7

I want to echo the recommendation to sell "as is".  We felt like we had to fix up our house before selling and ended up in a stressful whirlwind of getting a line of credit on the house to make the repairs, taking the 4 months to get the repairs done, and then selling the house.  In hind site, we could have received just as much money in the end if we had sold "as is" and priced the house accordingly.  

 

Sometimes buyers offer a little more for houses and then ask for cash back at close of escrow.  In this way they have money for repairs at a low rate of interest.  It just requires a bank appraisal that matches the price they want to offer.

 

I suggest getting 3 real estate agents to give you their recommendation for selling price.  Make sure they back up their recommendation with examples of recently sold homes from your area.  Don't believe the one who gives you the highest price.  Then go with an agent who is part of the biggest real estate office in your area.  It does make a difference because the larger offices have bigger networks to find buyers.  Unless you have offers waiting in the wings and can do a "sale by owner".  That's a little more tricky in the US, but relatively strait forward in Canada.  I don't know where you are located.

 

Hugs to you.  This is a lot to juggle as a family.

post #6 of 7

My Realtor told us that a roof guarantee literally means they have to replace it. Maybe you should look into that?

post #7 of 7
You should be able to provide the buyer a credit via escrow for the roof repairs. I do real estate loans and I see credits for repairs written into purchase agreements.
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